A very interesting article in the FT today with some useful analysis in respect of the online vs. high street debate in the retail space. 

What does seem clear is that framing this debate as one or the other would appear to be incorrect. The pandemic driven spike in the share prices of online only outfits such as ASOS and boohoo were always going to be temporary as the COVID restrictions were always only going to be temporary measures (albeit it did not feel like that at the time!). 

Our recent experience shows that margin pressure on online only retailers will likely increase in 2024 as factors like under-utilised fulfilment centres as a result of increased competition will act as a drain on cash. We do expect to see consolidation in the online retail space as boards and shareholders look to preserve value as best possible although there will undoubtedly also be a number of failures.

Competition will be even more fierce at the lower value end of the spectrum with recent Far East entrants now becoming established players and the indication from other discount retailers that they are assessing their options to enter the market, appreciating this will look slightly different than what we have seen before given the lower average order value. 

Nobody has a crystal ball, but the retail backdrop remains challenging for all market participants, and we expect to see a steady level of restructurings but with relatively new strategies available, such as Restructuring Plans, we hope that the flow of well-known brands exiting the retail space will be stymied.